Estate planning can involve many different kinds of documents. For many testators, the only document they worry about is a last will. Others need a more comprehensive plan include other documents. Trusts are popular inclusions in modern estate plans because they give more control over the use and distribution of estate assets when compared with a standard last will.
A surprising number of people think that an estate plan will include either a last will or a trust. However, many include both documents. Why would someone use a last will and a trust when planning their estate?
The trust may only manage certain, large assets
People frequently use trusts to avoid probate for big assets like a piece of real estate or a well-funded investment account. Funding a trust with major assets shields them from creditors, helps the person planning qualify for Medicaid and even helps sidestep estate taxes.
However, especially if they designate a corporate or business trustee instead of an individual trustee, the testator likely will not move less valuable personal property into the trust. They will have a last will designating who receives meaningful items with emotional value from their property.
A combination of the two kinds of documents can give someone all the protection and control of a trust while still allowing some of their assets to pass through probate as a traditional estate. Thinking about the inheritance you would like to leave for your loved ones and what assets you have can give you a better idea about whether a trust, a last will or both is the best option for your estate plan.